The organic market: Grocers work at filling demand

SALEM, Oho – With a growth of 20 percent per year, the organic food market is booming.
And ag economists expect it’s only going to get bigger.
In 2003, retail sales hit $13 billion, said Ohio State’s Marvin Batte, and that number is expected to hit $19 billion by 2009.
That’s good news for forward-thinking farmers, but what about the grocery stores? What are they doing to accommodate this growth?
Nature’s Basket. Giant Eagle, the supermarket dominating parts of Pennsylvania, West Virginia and Ohio, was a step ahead of many other grocers and began offering organic products about 10 years ago, according to spokesman Brian Frey.
Now, the store offers 71 organic produce items, including everything from avocados to apples.
To capitalize on this growth, it started Nature’s Basket, a department dedicated to organic and natural products, Frey said. Paper products, sports drinks, cereal and vitamins are all now sold in this section.
With all these choices, Frey estimates 25 percent of Giant Eagle customers buy organic products.
The growth in organic purchases has been steady and now represents about 2 percent of the store’s total sales, Frey said.
Demand vs. selection. Wal-Mart Supercenters are also increasingly offering more organic choices, said spokeswoman Karen Burk.
The chain began offering organic choices at some of its stores several years ago, she said.
Each grocery store’s organic selection is a little different, she said, because it depends on what customers are requesting.
Although Burk said it’s difficult to break down which areas are selling the most organic products, the number of offerings reflects the demand in that area.
“As the demand grows, so will the selection,” Burk said.
Unlike Giant Eagle, Wal-Mart Supercenters do not have a special organic department, she said. Instead organic dairy products are in the dairy case and organic dry foods are on shelves beside their counterparts.
This works better because customers like to shop by category, she said; when they want milk, they go to the dairy department, and when they want bananas, they go to the produce department.
Pricey. But then there’s the price issue.
Simply, organic products cost more.
A recent Ohio State study found consumers are willing to pay more, but just how much more isn’t quite as clear.
Factors like health, food safety, level of organic ingredients and where buyers shop all influence the premium they’ll pay for organic products.
For example, researchers found shoppers’ willingness to pay for organics increased with their age, household income and number of children at home. They also found female consumers are willing to pay more.
But researchers also found the No. 1 reason people steer away from organics is because of the price.
Kishman’s IGA’s produce manager Karen Manley has seen this firsthand in the last five months at the store in Minerva, Ohio.
The grocery began selling organic produce in October, she said.
“We’re getting it in and throwing it away,” Manley said.
Organic products are more expensive and customers just aren’t willing to pay those prices, she said.
Manley said she’s also been the produce manager at other smaller grocery stores and each faced the same problem.
New brand. Giant Eagle is trying to fight this stigma by offering its own corporate line of organic goods.
“Our corporate brands on average are approximately 10 percent to 15 percent lower than the leading brand, while promising to be as good, if not better, quality,” Frey said.
(Reporter Kristy Hebert welcomes reader feedback by phone at 800-837-3419 or by e-mail at khebert@farmanddairy.com.)